How Housing Costs Drive Levels of Homelessness
A new analysis of rent prices and homelessness in American cities demonstrates the strong connection between the two: homelessness is high in urban areas where rents are high, and homelessness rises when rents rise.
To identify and illustrate the housing market dynamics driving these trends, The Pew Charitable Trusts compared homelessness and rent data in 2017 and 2022. In recent years, many metro areas in the U.S. have seen stark increases in levels of homelessness along with fast-rising rents. At the same time, some other locales that saw slow rent growth experienced declines in homelessness.
Media reports have highlighted increases in homelessness and the emergence of encampments in numerous cities, including Austin, Texas; Fresno, California; Phoenix, Arizona; Raleigh, North Carolina; Sacramento, California; and Tucson, Arizona. But other urban areas where homelessness declined over the same period—such as in Chicago, Houston, Minneapolis, and Philadelphia—recorded slower growth in rents than in the U.S. overall.
A large body of academic research has consistently found that homelessness in an area is driven by housing costs, whether expressed in terms of rents, rent-to-income ratios, price-to-income ratios, or home prices. Further, changes in rents precipitate changes in rates of homelessness: homelessness increases when rents rise by amounts that low-income households cannot afford. Similarly, interventions to address housing costs by providing housing directly or through subsidies have been effective in reducing homelessness. That makes sense if housing costs are the main driver of homelessness, but not if other reasons are to blame. Studies show that other factors have a much smaller impact on homelessness.
